Yukon Energy's proposal for a new $42-million LNG facility has been given unconditional approval by the Yukon Utilities Board – though some strongly disagree.

"The board is of the opinion that the public benefit of the project is significant and that the project should be approved because there is a public need,” writes board chair Bruce McLennan in his letter Wednesday to Justice Minister Mike Nixon.

"For the reasons set out in the report, the board is not recommending any conditions to the project.”

The Justice minister, in accordance with legislation, instructed the utilities board last November to conduct a full public review of the project. The board was given until April 15 to file its recommendation. It sought and received an extension to May 30.

Parties involved in the application process were notified of the 50-page decision last night.

If Nixon accepts the recommendation, approval by the board means Yukon Energy has the go-ahead to pass on the cost of the project to Yukoners by adding it to the rate base.

The project involved a new generating plant beside Robert Service Way to provide backup generation for the grid, just as the diesels do now.

The generators will be located at the site along with a storage facility for the liquefied natural gas to be trucked up from B.C.'s Lower Mainland.

In the application, Yukon Energy said it wanted to begin construction this month, with an aim of having the plant operational by the end of the year.

Energy, Mines and Resources Minister Scott Kent said early this afternoon there are still a few steps to go in the approval process.

The government, he pointed out, is still waiting for the final screening report from the Yukon Environmental and Socio-economic Assessment Board. The board did recommend approval of the project in its draft report issued March 20 for public review, and is now preparing the final report.

Kent said the Justice minister will then have to review all the material, and decide whether to issue a certificate approving the project, and under what conditions, if any.

Yukon Energy spokeswoman Janet Patterson said this morning it would be improper for the publicly owned utility to comment on the board's recommendation before the Justice minister announces his decision on the project.

Yukon Energy maintains the two new generators, with a third to come in the next couple of years, are needed to replace the two largest and oldest backup diesel generators at the Whitehorse Rapids Dam.

In its business case supporting the selection of natural gas over new diesel engines, the Crown corporation said it had to replace the old diesels with either new diesels at a cost of $33 million or generators powered by natural gas.

Going with natural gas, Yukon Energy maintains, would save ratepayers millions in fuel costs, and the exhaust emissions will be cleaner.

The utility maintains savings in fuel costs over the first four years of operations would more than cover the difference between new diesels and natural gas generators.

In its decision, the utilities board noted there was no evidence provided to counter Yukon Energy's business case.

Roger Rondeau of the Utilities Consumers' Group said this morning he was not surprised by the board's approval.

The utilities board and everybody else was held to ransom by the fact Yukon Energy had already invested $25 million into the project before the board even held its public hearing, Rondeau suggested.

"To me, again, this looks politically motivated,” he said. "That is my opinion, and I'm sticking to it.”

Rondeau said he's also not happy that the board gave unconditional approval of the proposal.

The board, for instance, did not provide any direction if the project goes over-budget, and how going over budget would impact on Yukon Energy's business case, he said.

Anne Middler of the Yukon Conservation Society said this morning the society strongly disagrees with the board's decision, but also is not surprised.

"We do not see the public need, and we do not see the benefit,” she said. "There was a three-year business case for a 40-year project.”

Middler said the task at hand now is to hold Yukon Energy to its word that the new facility will be used for backup generation only.

The society will guard against Yukon Energy trying to use the facility to provide more than just backup power, she said.

Middler said the territory's energy future needs more renewable energy options to meet the growing demand, and not fossil fuel generation.

Like Rondeau, Middler hinted at political connotations to the utilities board's decision.

The recommendation for approval is a green light to begin the industrialization of the Yukon's natural gas resources by using hydraulic fracturing, she said.

"We see this as the Yukon government wanting to frack the Yukon to power the mines with fracked gas.”

Middler also pointed out Yukon Energy had already spent $18 million in preparation for the project before the utilities board held its public hearing.

Yukon Energy had maintained from the outset that it needed to order the new generators in advance to have them in time to meet the project schedule.

If the project was not approved, it insisted, it would have no trouble selling the new generators.

It explained to the board during the public hearings that in addition to ordering the generators, there were upfront costs necessary to advance the proposal, including all the studies and preparation required for the reviews by YESAB and the utilities board.

In its draft screening report, the assessment board noted it did not attach a lot of conditions to its recommendation for approval because Yukon Energy had done such a thorough job of addressing all aspects of the project.

There was, on the other hand, unanimous opposition to the project expressed during the public hearing held by the assessment board and the public hearing held by the utilities board.

There were arguments LNG is not cleaner than diesel, when considering the whole live cycle, from the well to the burner.

Embracing LNG amounted to approval of the controversial process of hydraulic fracturing, even if it wasn't yet happening in the Yukon.

Both boards heard how tying up $42 million in new fossil fuel generation would restrict Yukon Energy's financial ability to pursue renewable energy alternatives.

And safety concerns were raised over having an LNG facility so near to a populated area – Riverdale – and next door to the Whitehorse dam, the territory's primary source of energy.

Yukon Energy, however, provided evidence that LNG facilities are safe, and that having the new facility next to the dam provided all kinds of advantages in construction and operational costs.